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    API Expert Addresses Kentucky Price Gouging Issues

    State lawmakers ponder adopting laws similar to those in Georgia.

    FRANKFORT, Ky. -- Gasoline retailers often raise prices as soon as they see oil prices rising out of concern they'll run short on cash when the time comes to refill their tanks, an oil-industry official told members of the Kentucky General Assembly yesterday, according to The (Louisville, Ky.) Courier-Journal.

    John Felmy, chief economist and director of policy analysis and statistics for the American Petroleum Institute, went to Frankfort yesterday to answer questions from the interim joint committee on transportation, which was conducting a hearing on "gasoline pricing and price gouging," the Courier-Journal reported.

    "Citizens are concerned" about sudden, unexplained price spikes that send gasoline costs up 20 or 30 cents a gallon in one day, said state representative Hubert Collins (D-Wittensville), committee co-chair. They also wonder why gas stations often seem to raise prices in unison, he said.
    Price jumps aren't a sign of collusion among the oil companies or stations, Felmy said. "They don't need to talk to each other. They simply look across the street" at the posted prices of their competitors.

    Rep. Keith Hall (D-Phelps) said Kentucky might want to consider some of the laws in Georgia, where gas costs substantially less than in Kentucky, the Courier-Journal reported.

    Among that state's regulations, Hall said, are prohibitions against price gouging and zone pricing -- that is, charging differing wholesale rates for different parts of the state.
    Mike Helton, government relations representative for the Kentucky Petroleum Marketers Association, said the lower prices in Georgia might reflect the lower state excise tax on gasoline there -- not the regulations. But Hall was unconvinced.

    If such regulation is working in Georgia, "why would it be bad for Kentucky?" he asked after the hearing. Hall said he might introduce legislation similar to Georgia's in the upcoming General Assembly, the newspaper reported.
    Roger Boyd, AAA Kentucky spokesman, said, "Motorists are, simply put, angry with the way gas prices have fluctuated this year.

    "I have been keeping an eye on gas prices for AAA in Kentucky for 10 years," Boyd said. Motorists have never before "had to put up with such dramatic increases in prices in frequency, severity and suddenness."
    The price increases "have seldom been associated with market conditions that warrant such increases," he said, according to the news report.

    The national average price for a gallon of self-serve regular is $1.50, according to AAA. That's down about 7 cents from a month ago -- and it's down more than 23 cents from the Aug. 30 average of $1.74. The Kentucky average stands at $1.41.

    Felmy blamed gasoline increases on a variety of factors, including the war in Iraq, labor unrest in Nigeria and pipeline problems in Phoenix, Ariz. Still, he said, profit margins remain thin for the oil industry ? just about a nickel on the dollar. The industry is "struggling hard to meet the demand of consumers," Felmy said, according to the report.

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